A lot of lenders offer cashbacks on mortgage deals. Are these taxable?
The answer is simply that you think and makes complete sense. The business income manuals (part of HMRC internal guidance – publicly available however) states at BIM100210 that:
“A cash-back received in the course of trading is a receipt of the trade to be included in taxable trade profits.”
This makes sense because property people generally pay tax on all income or proceeds derived from their property. Although not directly this is derived from the property.
The guidance does go on to exclude the charge to tax for those “not carrying on a trade or property business”.
So if you get Cashbacks on your home mortgage then that is yours! Landlords acting as part of their property business are taxed however.